A bottomless pit of bottoms?
June 01, 2010
– Comments (16) |
RELATED TICKERS: OPTR
, EXEL
How many bullets has the market fired at us? Is there still one left in the chamber? Do you feel lucky? Well, do you punk?
My war-weary long positions took another blasting today but my GBMB portfolio held up fairly well, especially my latest additions. I've still got a lot of dry powder so when the market drops a cap in my ass, I shoot back. Here's two more bottoms to put a slug into.
Optimer Pharmaceuticals (OPTR) - market cap 385M, share price 10.07. Cash 81M, debt 0, burn 10-13M. Optimer has completed two solidly positive phase III trials for each of two developmental antibiotics, fidaxomicin for clostridium difficile colitis and prulifloxacin for traveler's diarrhea. Despite reporting positive topline results of the second phase III trial of prulifloxacin well over a year ago, there has been no word on an NDA or a partnership and the drug was barely mentioned in the last quarterly PR. However, an NDA application for fidaxomicin will be filed in the second half of 2010. After raising 51M in a dilutive financing in March, the company should be set for cash through the fidaxomicin PDUFA. Some questions have been raised regarding whether the phase III trials truly demonstrate that fidaxomicin is superior to the standard of care. These concerns may relate to why the share price has never taken off despite phase III successes. But the share price is now close to an eighteen month low and it is hard to foresee that it will not recover once the fidaxomicin NDA is submitted. In CAPS, Portefeuille is a bloodied believer. I'll be a GBMB buyer below 10.
Exelixis (EXEL) - market cap 531M, share price 4.89. Cash 153M, debt 76M, burn 25-45M. The most heavily green-thumbed baby biotech in CAPS is also one of the most frustrating. Exelixis has been around more than ten years and the share price has been below 5 for about 5% of that time. I won't get into the extremely complex and wide pipeline, but suffice it to say that a lot of trials are going on and positive or negative catalysts could occur at any time. Dilution is always a possibility. However, nothing about Exelixis's current position indicates that they should be significantly undervalued compared to their historical valuation. Green-thumbers are a virtual CAPS All-Star team, including Vanamonde, Eldrehad, NTMF, SpecBear(!), and Portefeuille although admittedly most of those picks are ancient and deeply under water. I see this as a GBMB buy under 4.5.
I'm currently in MYGN, ITMN, RIGL, IDRA, DSCO, BDSI, and FOLD and I expect I'll likely be in MYRX, OPTR, RTIX, and possibly SVNT if current trends continue. I'll update my positions and track record again some time this month.
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